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CBS News
23-07-2025
- Business
- CBS News
Student loan forgiveness in the IBR plan is paused, Education Department says. Here's what to know.
Millions of people with student loans who are enrolled in a popular repayment plan are now in limbo, with the Department of Education saying it has temporarily paused forgiveness for borrowers in its income-based repayment plan, or IBR. Such plans offer a double benefit for borrowers by lowering a person's monthly loan repayment to reflect their income, while also promising to provide forgiveness after a number of years. Specifically, the government can cancel the balance of student loan after people have made payments for at least 20 years. About 40% of the roughly 33 million people repaying student loans were enrolled in one of the Education Department's four such repayment plans at the end of 2024, according to data from the National Student Loan Data System and the Government Accountability Office. But three of those programs had previously been halted by a court ruling, while forgiveness for the roughly 2 million people enrolled in the fourth — IBR — is now also paused. On Tuesday, Education Department deputy press secretary Ellen Keast told CBS MoneyWatch that the agency "has temporarily paused discharges for IBR borrowers in order to comply with ongoing court injunctions regarding the Biden Administration's illegal attempts at student loan forgiveness." The court injunctions stem from 2024 lawsuits related to the Biden administration's flagship student loan repayment plan, called the Saving on a Valuable Education, or SAVE, plan. That initiative, created to fix long-standing issues with the Education Department's previous income-based plans, proved popular with borrowers, with almost 8 million enrollees at the end of 2024, National Student Loan Data System data shows. Because the SAVE plan could count toward loan discharges in the IBR program, the Education Department is now temporarily halting forgiveness for enrollees in that plan. The Education Department said the loan discharges will resume at some point, but didn't provide a timeframe for when that might occur. Student loan forgiveness under three of the federal government's income-driven plans — SAVE; Income-Contingent Repayment (ICR); and Pay As You Earn (PAYE) — is currently paused after a court ruled last summer that Congress exceeded its authority in approving those plans. The legal action last year called into question whether student loan forgiveness was authorized under the federal statute that governs those plans. But the IBR plan was created under a different authority. The Education Department didn't specify a timeframe in its statement to CBS MoneyWatch. It noted that the SAVE plan allowed forbearances — when loan payments are temporarily halted or reduced — to be counted toward loan forgiveness, but that the rule was halted by the court ruling. Because of the injunction, the Education Department said it needs to recalculate how many payments made by borrowers should contribute toward repayment. "Legal IBR discharges will resume as soon as the Department is able to establish the correct payment count," said Keast of the Education Department. Yes. Borrowers in the federal IBR plan are eligible to have their student loans canceled after making payments for at least 20 years. However, some people eligible for such forgiveness have yet to see their loans canceled. They should continue making those payments, and the Education Department will eventually refund them, according to the agency. "For any borrower that makes a payment after the date of borrower eligibility, the Department will refund overpayments when the discharges resume," Keast said. Borrowers can also request forbearance from their loan servicer. In that case, interest would continue to accrue on any remaining Associated Press contributed to this report.
Yahoo
09-06-2025
- Business
- Yahoo
Warren urges Department of Education IG to investigate DOGE access to student loan data
Sen. Elizabeth Warren, D-Mass., is requesting the Department of Education's Office of Inspector General review the Department of Government Efficiency's alleged "infiltration" of the agency's internal federal student loan database. "The full extent of DOGE's role and influence at ED remains unknown," Warren wrote in a letter first obtained by ABC News. "This lack of clarity is not only frustrating for borrowers but also dangerous for the future of an agency that handles an extensive student loan portfolio and a range of federal aid programs for higher education," she added. The internal federal student aid (FSA) systems handle the $1.6 trillion student loan portfolio for more than 40 million borrowers. It's unclear whether DOGE has made any changes to student loan data. MORE: Elizabeth Warren launches campaign to investigate Department of Education closure: 'I will fight it with everything I've got' "The Department is refusing to tell Americans who's digging through their personal data and if their data is safe," Warren wrote in a statement to ABC News. "I'm pushing for an independent investigation into what the Department of Education is hiding from us." The OIG office is the statutory, independent entity within the department responsible for identifying fraud, waste, abuse, and criminal activity involving department funds, programs, and operations, according to its website. Warren and a group of Democratic senators, including Sens. Tammy Duckworth, D-Ill., Ben Ray Lujan, D-N.M., Ed Markey, D-Mass., Jeff Merkley, D-Ore., Tina Smith, D-Minn., Chris Van Hollen, D-Md., Richard Blumenthal, D-Conn., Cory Booker, D-N.J., and Ron Wyden, D-Ore., accuse the Department of Education of refusing to comply with her monthslong congressional investigation into what, if any, records have been accessed by DOGE employees that could be sensitive. "[The Education Department] further refused to disclose any information about the scope of DOGE's access to sensitive student borrower data, including whether or not DOGE was granted access to the National Student Loan Data System or any other database that holds sensitive federal student loan borrower data," they wrote in the letter to Department of Education Acting Inspector General René L. Rocque. Billionaire Elon Musk and the DOGE team gained access to several federal agencies earlier this year. The team was tasked to slash federal spending and help dismantle the education department. At a House Appropriations Committee hearing on the department's fiscal year 2026 budget last month, Education Secretary Linda McMahon said the DOGE employees working at the department had the same access any of the agency's employees would be granted. MORE: Secretary McMahon wants Harvard to 'come back to the table' to negotiate with Trump admin McMahon has also said that DOGE was conducting a 'solid audit' of the agency and she appreciates their work to help identify waste, fraud and abuse. The news comes ahead of Warren's first ever meeting with McMahon. Warren sent McMahon dozens of questions ahead of the meeting as she hopes to discuss student loan repayment and forbearances, access to student aid and debt relief, among other topics. However, in February, Warren opened an investigation into DOGE's influence at the agency. The department's responses to her investigation did not indicate how a DOGE employee who previously had "read-only access" to files had those privileges "revoked," whether this employee has 'retained access' to any other internal databases, and what actions the agency has done to ensure that sensitive information would not be 'released or misused," according to Warren's letter to the inspector general. In its responses, the department said it couldn't answer the senator's questions due to 'ongoing litigations,' the letter added. "These responses failed to diminish our concerns about borrowers' privacy and whether the Department may have violated the law or the federal government's procedures in handling this data," senators wrote in the letter. ABC News reached out to the Education Department and the White House about DOGE's access to borrower data but did not receive a reply before this story was published. In April, Warren launched her "Save Our Schools" campaign in opposition to President Donald Trump's and McMahon's efforts to dismantle the department. The senator has previously investigated the firing of FSA employees and how a reduction in staff at the agency could have "dire consequences" for borrowers. "ED should immediately restore all fired [Federal Student Aid] employees responsible for reviewing student aid complaints and refrain from taking any measures to deter the submission of complaints," Warren and a group of Democratic senators wrote in a letter to McMahon in March. Recently, congressional Democrats insisted McMahon cooperate with a separate inspector general review of the administration's plan to shutter the smallest Cabinet-level agency. A group of lawmakers on the Education and Workforce, Oversight, Homeland Security and Governmental Affairs, and Appropriations committees in the House and Senate sent the secretary a letter requesting she comply with the federal watchdog. "The OIG must be allowed to do its job," they wrote. "We urge the Department to immediately meet its obligation under the law to fully comply with the OIG's review. "Congress and the public need to understand the full extent and impact of the Administration's actions on the Department and the students, families, and educational communities it may no longer be able to serve," they added. McMahon's "final mission" as the 13th education secretary is to abolish the department, but the administration's first steps to diminish the agency was denied in a federal appeals court loss last week. The Department of Education has since filed an appeal with the Supreme Court. Warren urges Department of Education IG to investigate DOGE access to student loan data originally appeared on
09-06-2025
- Business
Warren urges Department of Education IG to investigate DOGE access to student loan data
Sen. Elizabeth Warren, D-Mass., is requesting the Department of Education's Office of Inspector General review the Department of Government Efficiency's alleged "infiltration" of the agency's internal federal student loan database. "The full extent of DOGE's role and influence at ED remains unknown," Warren wrote in a letter first obtained by ABC News. "This lack of clarity is not only frustrating for borrowers but also dangerous for the future of an agency that handles an extensive student loan portfolio and a range of federal aid programs for higher education," she added. The internal federal student aid (FSA) systems handle the $1.6 trillion student loan portfolio for more than 40 million borrowers. It's unclear whether DOGE has made any changes to student loan data. "The Department is refusing to tell Americans who's digging through their personal data and if their data is safe," Warren wrote in a statement to ABC News. "I'm pushing for an independent investigation into what the Department of Education is hiding from us." The OIG office is the statutory, independent entity within the department responsible for identifying fraud, waste, abuse, and criminal activity involving department funds, programs, and operations, according to its website. Warren and a group of Democratic senators, including Sens. Tammy Duckworth, D-Ill., Ben Ray Lujan, D-N.M., Ed Markey, D-Mass., Jeff Merkley, D-Ore., Tina Smith, D-Minn., Chris Van Hollen, D-Md., Richard Blumenthal, D-Conn., Cory Booker, D-N.J., and Ron Wyden, D-Ore., accuse the Department of Education of refusing to comply with her monthslong congressional investigation into what, if any, records have been accessed by DOGE employees that could be sensitive. "[The Education Department] further refused to disclose any information about the scope of DOGE's access to sensitive student borrower data, including whether or not DOGE was granted access to the National Student Loan Data System or any other database that holds sensitive federal student loan borrower data," they wrote in the letter to Department of Education Acting Inspector General René L. Rocque. Billionaire Elon Musk and the DOGE team gained access to several federal agencies earlier this year. The team was tasked to slash federal spending and help dismantle the education department. At a House Appropriations Committee hearing on the department's fiscal year 2026 budget last month, Education Secretary Linda McMahon said the DOGE employees working at the department had the same access any of the agency's employees would be granted. McMahon has also said that DOGE was conducting a 'solid audit' of the agency and she appreciates their work to help identify waste, fraud and abuse. The news comes ahead of Warren's first ever meeting with McMahon. Warren sent McMahon dozens of questions ahead of the meeting as she hopes to discuss student loan repayment and forbearances, access to student aid and debt relief, among other topics. However, in February, Warren opened an investigation into DOGE's influence at the agency. The department's responses to her investigation did not indicate how a DOGE employee who previously had "read-only access" to files had those privileges "revoked," whether this employee has 'retained access' to any other internal databases, and what actions the agency has done to ensure that sensitive information would not be 'released or misused," according to Warren's letter to the inspector general. In its responses, the department said it couldn't answer the senator's questions due to 'ongoing litigations,' the letter added. "These responses failed to diminish our concerns about borrowers' privacy and whether the Department may have violated the law or the federal government's procedures in handling this data," senators wrote in the letter. ABC News reached out to the Education Department and the White House about DOGE's access to borrower data but did not receive a reply before this story was published. In April, Warren launched her "Save Our Schools" campaign in opposition to President Donald Trump's and McMahon's efforts to dismantle the department. The senator has previously investigated the firing of FSA employees and how a reduction in staff at the agency could have "dire consequences" for borrowers. "ED should immediately restore all fired [Federal Student Aid] employees responsible for reviewing student aid complaints and refrain from taking any measures to deter the submission of complaints," Warren and a group of Democratic senators wrote in a letter to McMahon in March. Recently, congressional Democrats insisted McMahon cooperate with a separate inspector general review of the administration's plan to shutter the smallest Cabinet-level agency. A group of lawmakers on the Education and Workforce, Oversight, Homeland Security and Governmental Affairs, and Appropriations committees in the House and Senate sent the secretary a letter requesting she comply with the federal watchdog. "The OIG must be allowed to do its job," they wrote. "We urge the Department to immediately meet its obligation under the law to fully comply with the OIG's review. "Congress and the public need to understand the full extent and impact of the Administration's actions on the Department and the students, families, and educational communities it may no longer be able to serve," they added. McMahon's "final mission" as the 13th education secretary is to abolish the department, but the administration's first steps to diminish the agency was denied in a federal appeals court loss last week.
Miami Herald
06-06-2025
- Business
- Miami Herald
What to do if your credit score is harmed by the restart of federal student loan collections
What to do if your credit score is harmed by the restart of federal student loan collections There are many benefits that come with a good credit score: better rates on car and homeowners insurance, more housing options, and the ability to snag credit cards with the best rewards, just to name a few. But soon millions of student loan borrowers may have to say goodbye to some of those perks. More than 9 million student loan borrowers will face "significant drops" in their credit scores once delinquencies appear on their credit reports in the first half of 2025, according to a recent report from the Federal Reserve Bank of New York. The delinquencies come as a result of the Education Department restarting collection efforts on federal student loans that are in default after having paused those efforts for years. If you see your credit score take a tumble, you'll likely be wondering what to do next. Current, a consumer fintech banking platform, shares everything you need to know about why scores are dropping and what steps you can take to start bumping your score back up. Why student loan borrowers' credit scores are dropping One of the federal government's many COVID-19 pandemic-era relief efforts was the pause on federal student loan payments - a pause that was extended several times, giving borrowers room to breathe over the last few years. In 2023, borrowers were given a yearlong "on-ramp" period during which late or missed payments didn't lead to a hit on their credit reports. That period expired in September, and, because payments need to be at least 90 days late before falling into delinquency, we're starting to see the effects on delinquency now. "The first batch of past due student loans were reported in the first quarter of 2025, resulting in a large jump in seriously delinquent borrowers," Daniel Mangrum, research economist at the New York Fed, notes in a recent report. More than 2.2 million of those newly delinquent borrowers saw their credit scores plunge more than 100 points, and more than 1 million saw decreases of at least 150 points. What to do if your credit score is harmed The first step to getting back on track when it comes to your student loans and credit score is to get a good grasp of your current situation, says Anjali Jariwala, a financial advisor and founder of Fit Advisors in Redondo Beach, California. She says to visit the Federal Student Aid website and pull a report from the National Student Loan Data System, which can give you a full history of your student loans, including outstanding balances. Then, she recommends working with a student loan consultant to fully understand your options. But there may not be much more you can do regarding your student loans beyond trying to make payments. At that point, it's time to take other steps to boost your score. Minimize revolving debts and make on-time payments If you have other debts, work on bringing those down in conjunction with paying back your student loans, says Andre Small, a financial advisor and founder of A Small Investment in Houston. That's especially important for high-interest revolving debt, such as credit cards. And while it's fine - and actually beneficial to your credit score - to have a diverse range of types of credit (say, a credit card, auto loan and mortgage on top of your student loans), it's important to make your payments on time. Maintaining a long credit history can also help give your score a bump, so instead of closing an old credit card account, consider putting a small recurring cost like a subscription service on that card. Get a higher credit limit Your credit utilization ratio, also referred to as your credit utilization rate, is a key factor that can impact your credit score. This ratio is the amount of credit you're using divided by the amount that's available to you. The lower you can get it, the better. One way to lower that ratio is to get a higher credit card limit. If you have a $1,000 limit and you spend $100, that's a 10% ratio. But if you increase that limit to $5,000, now you're looking at a 2% ratio. Banks will often alert you when you're eligible for a higher credit limit, such as if your income increases, but you can also call your credit card issuer directly and ask for a bump to your limit. However, you need to keep in mind that the higher limit doesn't mean you should go on a shopping spree. "The goal is not to increase your credit limit so you can spend more," Jariwala says. "The goal is just to get that ratio to be at that ideal level, which, for credit score purposes, is usually 10% or less." For younger consumers who may not be able to boost their credit limit, Jariwala adds that another option is to see if a parent can add you as an authorized user on their credit card, which can also help boost your credit score. Dispute any errors on your report One thing worse than taking an action that causes your credit score to fall is to have someone else hurt your credit score. With technology constantly evolving and scammers developing new and sophisticated ways to steal their victims' identities, the Federal Trade Commission received more than 1.1 million identity theft reports in 2024. That means it's more important than ever to regularly check your credit report for any activity you don't recognize and dispute any errors. You can get a free weekly report from the three major credit reporting agencies - Equifax, Experian and TransUnion - at and you can usually expect to see the results of an investigation within 30 days of filing the dispute. Use a credit builder card When evaluating secured credit cards that can help you build or repair your credit, look for the following features: The card can be used just like any other credit card. Even though it draws only from the funds available in your account, it will reliably build your credit history with every keeps track of your balance as you spend and ensures you have enough money set aside in reserved funds to cover your outstanding balance at the end of the enables you to set up automatic payments once or twice per month, as desired, paying your balance from your reserved funds with no additional action needed from provider reports your on-time payments to the three major credit bureaus to help build your credit history. This is important, as a history of on-time payments is a major factor in improving your credit score. For instance, Current's proprietary data shows that users of its secured card see an average 81-point credit score increase within six months. The result? Eventually, your credit score will start to creep up, ideally giving you more options and better interest rates when it's time to borrow money. This story was produced by Current and reviewed and distributed by Stacker. © Stacker Media, LLC.
Yahoo
02-04-2025
- Business
- Yahoo
Paying off student loans: 4 ways to start
Create an account with your loan servicer to begin making student loan payments. Discuss your repayment options with the servicer, which will vary depending on the type of student loan. Be sure to know what you owe and adjust your budget to free up disposable income to help make the repayment process more seamless. If you're financing your college degree with student loans, it's a good time to start thinking about when and how you'll repay your loans. Understanding what you need to do will help you determine your options and what will work best for your situation. You must set up an account with your loan servicer or lender to make your first student loan payment. You will receive a billing statement before your first payment is due. This statement will tell you the payment amount and the due date, and it may include instructions on how to make the payment. Here are some strategies to help prepare your finances and get started making student loan payments: Your loan servicer is the company you'll make payments to. If you have federal loans, you can find your loan servicer by visiting your Federal Student Aid account dashboard or the National Student Loan Data System. If you have private loans, you can check your credit reports if you don't have your original loan paperwork. Keep a record of all your loan servicers. You may have several if you've taken out multiple loans. You'll receive regular communication from your servicers about your loan repayment, and you'll need to make payments to each. Before starting repayment, confirm your total loan balance and monthly payment by logging into your Federal Student Aid account or your account with your servicer. You can use a loan calculator to investigate how different repayment timelines will affect your monthly payment and what happens if you make extra payments. You can also ask your loan servicer about income-driven repayment plans or other options to make your monthly payment more affordable. Look for ways to ensure your monthly student loan payment fits your budget without leaving you strapped to pay other bills. For example, see if you can reduce discretionary spending to free up more cash for student loan payments. Consider setting up automatic payments with your student loans. Doing so can help you lock in any available autopay discounts while helping you avoid missed or late payments. Lenders often offer a 0.25 percent interest rate discount to borrowers who set up autopay. Federal student loans are put on a standard, 10-year repayment plan unless you tell your loan servicer otherwise. Most private lenders offer multiple repayment terms ranging between five and 15 or 20 years. Ask your loan servicers about the options available, including refinancing to establish different repayment terms. With that in mind, research your options to select the best repayment plan for your needs. Learn more: Federal vs. private student loans: What's the difference? Extended repayment plan: The extended repayment plan sets a repayment timeline of 25 years, with payments that can be fixed or graduated. Direct Loan borrowers must have at least $30,000 in Direct Loans to qualify. Graduated repayment plan: Borrowers who expect regular salary increases may benefit from the graduated repayment plan, which starts student loan payments low and increases them gradually over time. Income-driven repayment plans: While income-driven repayment plans will extend your repayment period by 10 or 15 years, they can be a good option for lowering your monthly payments. With these plans, your payments will be a percentage of your discretionary income. Any remaining balance will be canceled at the loan term's end. Public Service Loan Forgiveness: With PSLF, borrowers working full time for eligible public service employers can pay down their loans on an income-driven repayment plan for 10 years before having their remaining balances forgiven. When you start repaying your student loans depends on the type of loan and the repayment plan you've worked out with the servicer. Most federal student loans require borrowers to begin making payments six months after graduation, drop below half-time enrollment or leave school. This period before you must start paying is called a forbearance or grace period. Federal student loans come with deferment and forbearance programs that let borrowers skip monthly payments during hardship. You can read about temporary deferment and forbearance options for federal student loans on the Federal Student Aid website. You can also get relief by setting up your student loans for income-driven repayment. These plans base your monthly payment on your income, and payments can be as low as $0 for those who qualify. When it comes to private student loans, repayment options and plans vary. Most private student loans let you defer payments until you graduate, and many offer grace periods ranging from six to nine months. Sometimes, private student loans offer payment plans that let you make interest-only or flat monthly payments during school. You'll make partial student loan payments once the loan is disbursed. If your student loan payments become due and you don't have a job or any other sources of income, you may be able to apply for temporary relief. Federal student loans come with deferment and forbearance programs that let borrowers skip monthly payments during hardship. You can read about temporary deferment and forbearance options for federal student loans on the Federal Student Aid website. You can also get relief by setting up your student loans for income-driven repayment. These plans base your monthly payment on your income, and payments can be as low as $0 for those who qualify. Prepare to pay your loans early If you're graduating, leaving school or dropping below half-time status, check with your lender or loan servicer to know exactly when and how to start paying student loans. If you haven't landed a job yet, ask your lender or loan servicer about relief options. The best way to create a plan for repaying your student loans is to start by assessing what you owe and contact your student loan servicer to make your monthly payment more affordable. It's equally important to adjust your monthly budget to ensure you can afford to make timely payments each month. You can also save some interest and protect your credit rating by setting up automatic payments. Most importantly, assess your progress regularly and adjust your repayment plan, as needed. Sign in to access your portfolio
